Smoke signals: Declining cigarette use will shift industry's focus to smokeless products

Over the past five years, the Cigarette and Tobacco Manufacturing industry has persevered despite facing challenging operating conditions and intense scrutiny from both the government and the public. Federal excise taxes on cigarettes rose, and individual states increased their own excise taxes on tobacco several times over the current period. Meanwhile, cigarette consumption continued to decline steadily, further reducing demand for the industry's largest and most profitable product segment. Over the next five years, rising public scrutiny and an increasingly stringent regulatory environment, as well as ongoing class action suits against major tobacco manufacturers, will continue to tarnish the image of tobacco, accelerating the decline of this industry...purchase to read more.

Industry Statistics & Market Size
Revenue
$46bn
Annual Growth 13-18
1.0%
Forecast Growth 18-23
Profit
Employment
12,261
Businesses
137

Industry Threats & Opportunities

  • Demand for industry products such as smokeless tobacco helped mitigate declining sales of cigarettes
  • Major companies underwent significant structural changes to adapt to falling demand for traditional tobacco products
  • To combat negative associations, operators are developing new products
  • Industry Report - Industry Analysis Chapter

    Operators in the Cigarette and Tobacco Manufacturing industry produce a variety of tobacco products, including cigarettes, cigars, pipe tobacco, smokeless tobacco (i.e. chewing) and e-cigarettes. Over the five years to 2018, the industry experienced modest growth despite steadily declining smoking rates. The percentage of smokers in the United States has steadily declined since the 1980s; however, the industry continues to adapt to these increasingly challenging operating conditions. Cigarette and tobacco product producers enjoy significant brand loyalty and are thus able to pass on higher excise taxes and compliance costs to consumers in the form of higher prices. In turn, price markups help offset declining unit sales of cigarettes, which generate more than 70.0% of industry revenue. Add...purchase to read more.

    Additional Insights for the Cigarette & Tobacco Manufacturing Industry

    IBISWorld identifies 250 Key Success Factors for a business.The most important for the Cigarette & Tobacco Manufacturing Industry are

  • Economies of scale
  • Ability to effectively change community behavior
  • Marketing of differentiated products
  • IBISWorld analysts also discuss how external factors such as Percentage of smokers and Excise tax on tobacco products in the Cigarette & Tobacco Manufacturing industry impact industry performance..

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    What's in this report

    What is the Cigarette & Tobacco Manufacturing Industry?

    Operators in this industry manufacture cigarettes, cigars, loose pipe tobacco, smokeless (i.e. chewing) tobacco and e-cigarettes. Tobacco manufacturers acquire raw materials from tobacco growers, paper and fiber manufacturers, tobacco stemmers and tobacco redryers and process these into ready-to-use products sold to wholesalers and retailers.

    Industry Products
  • Regular cigarettes
  • Menthol cigarettes
  • Smokeless tobacco
  • Cigars
  • E-vapor products
  • Industry Activities
  • Manufacturing cigarettes
  • Manufacturing cigars
  • Manufacturing smokeless tobacco
  • Manufacturing electronic cigarettes and vaporizers for tobacco use
  • Reconstituting tobacco
  • Table of Contents

    Industry Definition
    Main Activities
    Similar Industries
    Additional Resources
    Industry Statistics Snapshot
    Industry Structure
    Executive Summary
    Executive Summary
    Key External Drivers
  • Percentage of smokers
  • Excise tax on tobacco products
  • Regulation for the Cigarette and Tobacco Production industry
  • Per capita disposable income
  • World price of tobacco

  • Current Performance
  • Industry consolidation
  • Profit expansion
  • Regulatory challenges and rising public scrutiny
  • Chart: Revenue Growth

  • Industry Outlook
  • Product innovation
  • Diminishing social acceptance
  • Profit margins
  • Table: Cigarette & Tobacco Manufacturing Industry Revenue Outlook

  • Industry Life Cycle
  • Life cycle reasons
  • Chart: Benchmarking - Cigarette & Tobacco Manufacturing Industry Lifecycle vs The Economy

  • Supply Chains
    Key Buying Industries
  • Grocery Wholesaling
  • Cigarette & Tobacco Products Wholesaling
  • Supermarkets & Grocery Stores
  • Convenience Stores

  • Key Selling Industries
  • Paper Mills
  • Seasoning, Sauce and Condiment Production
  • Tobacco Growing
  • Wood Pulp Mills

  • Products & Services
  • Regular cigarettes
  • Menthol cigarettes
  • Smokeless tobacco
  • E-vapor products
  • Other
  • Cigars
  • Chart: Cigarette & Tobacco Manufacturing Industry Products and Services Segmentation

  • Demand Determinants
  • Social norms
  • Price

  • Major Markets
  • Cigarette and tobacco wholesalers
  • Gas stations with convenience stores
  • Convenience stores
  • Supermarkets and grocery stores
  • Broadline grocery distributors
  • Exports
  • Chart: Major Market Segmentation for the Cigarette & Tobacco Manufacturing Industry

  • International Trade
    Business Locations
    Chart: Business Locations by State
    Market Share Concentration
    Key Success Factors
    Cost Structure Benchmarks
    ProfitPurchasesWagesMarketingOther
  • Chart: Cost Structure Benchmarking – Sector vs Cigarette & Tobacco Manufacturing

  • Basis of Competition
    Internal competitionExternal competition
    Barriers to Entry
  • Table: Barrier to Entry Checklist for the Cigarette & Tobacco Manufacturing Industry

  • Industry Globalization
    Altria Group Inc., Reynolds American Inc., Imperial Brands PLC,
  • Table: Altria Group Inc. - financial performance
  • Table: Reynolds American Inc. - financial performance
  • Table: Imperial Brands PLC - financial performance

  • Capital Intensity
  • Chart: Level of Capital Intensity for the Cigarette & Tobacco Manufacturing Industry
  • Chart: Tools of the Trade: Growth Strategies for Success

  • Technology & Systems
    Revenue Volatility
  • Chart: Volatility vs Industry Growth

  • Regulation & Policy
    Industry Assistance
    Table: Industry Data for the Cigarette & Tobacco Manufacturing Industry
    Includes:
  • Industry Revenue (2009-2023)
  • Industry Gross Product (2009-2023)
  • Establishments (2009-2023)
  • Businesses (2009-2023)
  • Employment (2009-2023)
  • Exports (2009-2023)
  • Imports (2009-2023)
  • Wages (2009-2023)
  • Percentage of smokers (2009-2023)

  • Table: Annual Percentage Change for Key Industry Data
    Table: Key Ratios for Industry Key Data
    Table: Industry Financial Ratios
    Cigarillo
  • A small and narrow cigar that is often wrapped in leaf tobacco (not paper).
  • Curing
  • The process of regulating temperature and humidity conditions for freshly harvested tobacco leaves.
  • E-Vapor
  • A broad category of electronic nicotine delivery systems (ENDS) that includes e-cigarettes, larger vaporizers and their accessories.
  • Electronic Cigarette
  • A battery-powered device that contains a nicotine-based liquid that is vaporized and inhaled, simulating the experience of smoking a traditional cigarette.
  • Menthol
  • A chemical derived from the peppermint or spearmint plants. Menthol naturally has a cooling effect, which can help reduce the harshness of tobacco smoke.
  • Reconstituted Tobacco
  • Tobacco made from the pulp of mashed tobacco stems and other parts of the tobacco leaf that would otherwise be waste that are then sprayed with nicotine and other substances lost during processing.
  • Snus
  • A type of moist powder tobacco consumed by placing it under the lip for extended periods of time.
  • What Our Customers Say

    Why buy this report?

    IBISWorld’s Cigarette & Tobacco Manufacturing Industry Research Report offers insight into the market at the national level. Our analysis highlights macro trends in the overall sector and the micro trends faced by companies that do business in the Cigarette & Tobacco Manufacturing industry. Our five-year outlook forecasts explain how the market is set to change and the product segments that will drive growth.

    IBISWorld industry market research reports enable you to:
    • Find out about key industry trends
    • Identify threats and opportunities
    • Inform your decisions for marketing, strategy and planning
    • Quickly build competitive intelligence
    This report on Cigarette & Tobacco Manufacturing:
    • Provides Market Size information to assist with planning and strategic decisions.
    • Includes the necessary information to perform SWOT, PEST and STEER analysis.
    • Helps you understand market dynamics to give you a deeper understanding of industry competition and the supply chain.
    • Analyses key performance and operational metrics so that you can benchmark against your own business, that of your customers’ businesses, or your competitors’ businesses.
    The Cigarette & Tobacco Manufacturing market research report includes:
    • Historical data and analysis for the key drivers of this industry
    • A five-year forecast of the market and noted trends
    • Detailed research and segmentation for the main products and markets
    • An assessment of the competitive landscape and market shares for major companies
    • And of course, much more

    IBISWorld reports on thousands of industries around the world. Our clients rely on our information and data to stay up-to-date on industry trends across all industries. With this IBISWorld Industry Research Report on Cigarette & Tobacco Manufacturing, you can expect thoroughly researched, reliable and current information that will help you to make faster, better business decisions.

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